There has been a big relief news for the investors of Wipro who are facing constant hesitation in the stock market. After a long wait of almost three years, the leading IT company has announced share buyback worth Rs 15,000 crore. If you also have Wipro shares in your portfolio, then this news is directly related to your pocket. Let us understand what is the real meaning of this buyback.
Price fixed at ₹250 per share
The company has fixed the price of ₹ 250 per share for this buyback. If we compare this with Thursday’s closing (₹210.15), then Wipro is giving a premium of about 19% to its investors. In simple words, the company is ready to buy back your shares at a price higher than the current market price.
This entire process will be done through ‘tender offer route’, in which Wipro will buy back a total of 60 crore equity shares. This accounts for 5.7% of the total paid-up equity of the company. This could prove to be a great opportunity for investors who are looking for a safe and profitable exit in the current volatile environment.
Entry of promoters
The most interesting and noteworthy part of this buyback is related to the promoters’ stake. Wipro’s promoters (who hold 72.6% stake in the company) have also expressed their desire to tender their shares.
Market experts are considering this as a ‘neutral to mild negative’ signal. The economics behind this is simple, if promoters sell their shares on a large scale, then the message can be sent to Dalal Street that the management itself is booking profits at this valuation. However, if limited shares are sold by the promoters, then there is nothing to fear and small i.e. retail investors will directly benefit from it.
Why was there a need for buyback after 3 years?
Wipro’s stock has fallen by more than 20% so far this year. Even in the long term i.e. in the last 5 years, it has given negative returns of 10.42% to the investors.
Earlier, the company had done buyback of ₹ 12,000 crore in June 2023. For Wipro, which currently has a market cap of Rs 2.20 lakh crore, this buyback is not just a process of buying shares, but a big bet to support the falling shares and win back the trust of its angry investors.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money related decisions.
